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Thursday, August 03, 2017

THE ECONOMIC REALISM OF TRUMPONOMICS

Yesterday was great news for Trump. The Dow Jones Index (DJI) crept over 22000 for the first time. Trump points to this that the US economy is already booming under his presidency.

But I pointed out that the driver of this rise in the DJI is his treason in Riyadh where he agreed a $350 billion weapons and defence deal with the Saudis (who attacked the USA on 9/11 and unleashed the jihadis onto Libya and Syria and soon Iran). That deal enriched and empowered the military-industrial complex, a member of which is Boeing, which is also a corporation of the DJI. Boeing has the most expensive share price and the largest % increase in share price of all corporations in the DJI. But McDonalds and Apple also helped the DJI increase. These are globalist corporations, and their enrichment and empowerment should not be cheered.

Here is a more realistic vision of what Trumponomics is doing and can do:

Trump is right that the stock market is on a tear, up 22 percent since Election Day. But the stock market is not the economy, and the truth is that the economy hasn’t much changed since Trump took office. Growth remains at about 2 percent, wages are still barely rising and job gains, if anything, have slowed.

...Financial experts and most policymakers are normally hesitant to celebrate a rising stock market. During Barack Obama’s eight years in office, the Dow rose 140 percent, a result of him taking over during the depths of the Great Recession. But despite the huge growth in the Dow and the recovery from the recession, few, if any, economists would say the economy was strong under Obama. Economic growth fluctuated around 2 percent, and wages only inched forward. Voters’ anger over the economy was clear with the election of Trump.

Trump would have trouble replicating Obama’s stock market record if he tried: That would require the Dow to hit nearly 50,000 by 2025. His voters would be better served if he tried to build on the economic gains to spur stronger wage growth and full employment, while addressing structural challenges like weak productivity growth and declining labor force participation. These are hard issues, and they won’t be solved overnight—or in six months. They might not even show up in the Dow: stronger wage growth, for instance, hurts companies’ bottom lines.

How’s Trump doing on those more important measures so far? Nothing much has really changed. The president has been touting second-quarter GDP growth, which came in at 2.6 percent. “We have a growth rate which has been much higher than, as you know, anybody anticipated, except maybe us,” he said Wednesday. The last time quarterly economic growth reached that level? The third quarter of 2016.

Employment growth has slowed too. In the first six months of the year, the economy added 863,000 jobs, down from 955,000 in the same period last year. In the first half of 2014, the economy gained 1.3 million jobs. As for wage growth, it’s still muted: Average hourly earnings have risen just 2.5 percent over the past year.

So the truth is that Trump is not just fooling himself, he is fooling his beguiled dupes too: his performance is approximately that of Obama, if not worse. And to back that up, Trump claims credit for jobs that were announced under Obama!!

It can take years for economic policy to take effect. Trump's tax plans have not even been debated, so it could be a year before he can start to take credit for jobs, jobs, jobs. Until then the reason for the DJI increase is his treason.